SanDisk reported its Q3 earnings, which likely left some investors with mixed feelings. Revenue was up 7% year-over-year to $1.75 billion, and earnings per share came in at $1.09.

However, analysts were expecting $1.33 EPS on $1.76 billion, which is why some investors sold off shares in after-hours trading, sending the stock down about 7%. The fact that SanDisk's top brass lowered guidance for Q4 didn't help either. The company revised Q4 revenue estimates between $1.8 billion and $1.85 billion, below analyst estimates of $1.88 billion.

SanDisk posted $262.7 million in net income for the quarter, which was down about 5% year-over-year. Operating income was down about 5% year-over-year as well, hitting $388 million in the third quarter.

Despite SanDisk estimating lower Q4 revenue than it previously thought, if the company hits even the low end of its estimates ($1.8 billion) it'll still be incremental sequential growth from Q3's $1.75 billion. The company also announced a Q4 dividend of $0.30 per share for its common stock, payable in late November.

As Morningstar analyst Andy Ng noted, "Similar to recent quarters, SanDisk continues to benefit from a cyclical upturn in the NAND flash memory space and we expect the healthy supply demand tailwinds to continue for the time being."

Sanjay Mehrotra, the president and chief executive officer of SanDisk, said in the earnings report that, "Demand for NAND flash continues to be strong across mobile, client and enterprise, where SanDisk's innovations are creating significant opportunities."

That's good news for the company in the current quarter, but the cyclical flash memory business will work against the company in the near future.

Part of the upward cycle in NAND flash memory has allowed SanDisk investors to enjoy a solid run, with the company's stock price up about 23% since the beginning of this year.

But Ng went on to say that, "Although SanDisk's profits are currently being boosted by an upturn, flash memory chipmakers tend to see declining profitability during downturns."

That should give investors a bit of caution before jumping on SanDisk's stock, or at least make them wait to see if the company stock price comes down a bit from its upward trend.

Foolish thoughtsSanDisk has a strong position in the flash memory market, with customers like Apple using its chips, and it even has flash memory patents it collects royalties from.

Despite the cyclical nature of SanDisk's business, there are some solid future opportunities for the company. The enterprise market is still in a transition period between using hard-disk drives and faster flash storage. Because of the higher costs of flash, many companies are doing a combination of hard drive plus flash drives to accelerate memory speeds. But as the technology gets a bit cheaper -- and the demand for faster speeds increases -- SanDisk should be in a strong position to benefit from that demand.

In the short term, investors can likely expect continual fluctuations in the company's memory business, which in turn could affect its stock price. So SanDisk investors should be ready for some cyclical volatility, but be optimistic about the company's long term prospects for flash memory in the enterprise sector.

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